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What duties do travel providers have to their customers in a pandemic?

In February, Alexandra Cooke published an article exploring the obligations of travel providers to their customers as parts of the world started to shut their borders due to the outbreak of COVID-19. The outbreak has now been declared a pandemic by the World Health Organisation, and has resulted in unprecedented international border closures, national lockdowns, and airlines grounding their aircraft. At the date of writing, the UK Foreign and Commonwealth Office (FCO) is advising all British travellers against all non-essential overseas travel and has advised those abroad to return to the UK immediately. So, what obligations do travel providers have to their customers in a pandemic?

Obligations to package holiday customers

If a travel provider is the organiser of a package holiday (broadly defined as two or more different travel services which are combined for the purposes of the same trip), it will have certain obligations to its UK customers under the Package Travel Regulations (PTR) in the event it cancels, or makes a significant change, to a package holiday (which is permitted for reasons beyond the organiser’s control).

Obligations to customers due to travel within the next few weeks

Clearly, package holidays scheduled to depart while the FCO is advising against all but essential travel (which was initially until 16 April but is now indefinite, and could be revoked at any time) will not be able to go ahead as planned.

In these circumstances, a strict interpretation of the PTR requires organisers who are cancelling package holidays in the upcoming weeks to:

notify the affected customers, without undue delay before the start of the package (ie as soon as possible), that their holiday has been cancelled as a result of the FCO’s advice against non-essential overseas travel; and

issue a full refund to the customer within 14 days.

However, the European Commission has relaxed its position on the regulations, and as a result many EU countries (including France, Italy, Belgium, Spain, Germany, The Netherlands and Denmark) have taken action to amend their laws and/or provide additional guidance to help protect customer rights, while ensuring travel companies have a chance of surviving beyond the current crisis. This includes extending the time limit for issuing refunds to customers (which is 14 days under PTR), and allowing companies to issue Refund Credit Notes instead of a cash refund (see below). However, the UK Government is yet to take action and issue guidance on how it will balance the rights of UK holidaymakers with the imperative to keep the UK travel industry afloat. In the meantime, ABTA is advising UK holidaymakers to be reasonable when talking to their travel providers, and where possible:

Amend their holiday or travel arrangements to a different date (rather than cancelling the package). Many organisers are reaching out to customers offering the chance to rebook at a later date, with some offering a discount to encourage their customers to take this option.

Accept a Refund Credit Note instead of an immediate cash refund. This can be used to book another holiday at a later date, and until 31 July 2020, ensures the booking is still protected by ABTA/ ATOL where the original booking had that protection. After 31 July, if the customer has not redeemed the Refund Credit Note, it will be entitled to a full cash refund.

Where a full cash refund has been offered, be patient, as many travel providers will not have the cash to issue refunds within 14 days (as they will not themselves have received refunds from suppliers such as hotels and airlines).

Customers travelling later in the year

Given the speed with which the situation is changing, it is unclear how package holidays due to depart more than a couple of weeks ahead will be affected by the pandemic. Many organisers will not wish to make any decisions until they have a clear understanding of the restrictions in place and how these will affect bookings in the coming months. If and when travel restrictions are lifted, the likelihood is some destinations will remain on the FCO’s list of restricted countries, and others could be re-instated in the event of further outbreaks.

For those destinations where travel is once again permitted, organisers are likely to be faced with the brutal aftermath of the pandemic; hotels, airlines, tour operators and numerous other suppliers may no longer exist, or may no longer be able to offer the services they were contracted to provide, eg because of capacity or supply issues. In these circumstances, where there is going to be a significant alteration to the package holiday as a result of the pandemic, the operators will need to:

Tell the customer about the significant change before the start of the package.

Where possible, offer the customer alternative arrangements at no extra cost. If possible, the alternatives should be of the same or higher quality than those specified in the original contract. If the organiser is constrained to offer alternative arrangements of a lower quality, the customer should be refunded the difference in price. The customer is able to reject the alternatives proposed if they are not equivalent to those originally agreed, or if the price reduction is not adequate.

Give the customer a reasonable period in which to confirm whether they wish to accept the alternatives offered, or cancel the holiday and obtain a full refund. The organiser must contact the customer for a second time if they don’t get a response within the specified time period. The customer must be informed of what will happen if they don’t respond (ie whether they will be deemed to accept the change, or given a full refund).

If the organiser is unable to offer alternative arrangements, they must provide a full refund to the customer within 14 days.

It is likely that customers may not want to wait and see whether, and how, their holiday may be affected. Or they may also just get cold feet and decide they don’t want to take any risks. Where the customer wants to cancel in such circumstances (ie through choice) their cancellation rights will be subject to the travel provider’s cancellation provisions. These will only be binding on the customer if they are fair and transparent. Examples of unfair cancellation policies are charging the customer the whole or part of the price of the booking, regardless of when the customer cancels and whether the travel provider can recover its losses by re-selling the booking. Examples of fair and transparent cancellation policies are those which are justified, proportionate and clearly explained. For example, it is common for travel providers to have cancellation charges which only apply if the customer cancels shortly before the start of their trip or stay, to cover the risk of the booking being lost.

Customers already abroad

British nationals who are currently abroad have been advised to leave immediately. Under Regulation 15 PTR, the organiser is required to arrange for a flight back to the place of departure, or to another place to which the customer has agreed, and, where appropriate, offer compensation. However, in the current unprecedented situation, commercial flights are becoming increasingly limited, as airlines suspend flights and airports close.

Under Regulation 18 PTR, organisers are required to provide assistance to customers if they are in difficulty during their package holiday. According to government guidance, such assistance should involve providing, where appropriate, information on aspects such as health services and consular assistance as well as practical help such as finding alternative travel arrangements. The organiser can only charge a fee for such assistance if the difficulty is caused intentionally by the customer or through their negligence.

Obligations to non-package holiday customers

Customers who have only booked a single travel service (eg accommodation or flight only), or whose booking does not qualify as a package, have less legal protection when it comes to changes and cancellations. In most cases, their right to cancel will be governed by the travel provider’s terms of business, together with the terms of business of the service provider (eg the hotel or the airline). The customer must be provided with a copy of all terms and conditions which apply before they make their booking (otherwise they won’t be binding). The terms and conditions should also be fair and transparent.

Cancelled flights

In the case of customers due to fly while the FCO is advising against non-essential travel, it is likely their flight has been cancelled. Customers who are flying with an airline based in the EU, or who are flying out of the UK, will have the right to a full refund (including other flights from the airline in the same booking such as onward or return flights) in the event that their flight is cancelled under EC Regulation 261/2004. The individual travel provider’s terms and conditions of business should deal with what happens in the event the flight is cancelled or delayed. Where the customer is contracting directly with the airline, they will need to liaise with the airline directly. It avoids confusion if the travel provider explains exactly who is responsible and liable for what in its booking terms and conditions.

A duty to advise against travel?

Although the FCO is advising against non-essential travel, it is not illegal to go against this advice (although it is becoming increasingly difficult to do so). Case law suggests a travel provider will not be liable for sending its UK customers to a dangerous destination where the customer has chosen to travel there despite knowing the risks. Given the extensive press coverage of the coronavirus pandemic, a customer would be hard pressed to say it wasn’t aware of the risks of travelling overseas. However, there will be some British citizens who decide travel is essential.

Many providers choose to go beyond their duty of care, and cancel holidays to destinations which the FCO declares off limits, even where travel is still possible. All travel providers who are ABTA members are required by the 2018 ABTA Code to direct customers to the FCO website for travel advice.

Alexandra Cooke is an Associate in the Commercial team at Fladgate LLP. She advises on a range of commercial contract, intellectual property, and data protection issues and has a particular interest in the travel and leisure industries.

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